Gold, silver slump; fresh fundamental spark needed

(Kitco News) - Gold and silver futures prices are sharply down in midday U.S. trading Thursday. Both metals continue to trade in an inverse fashion with the daily movements of the U.S. dollar index, which on this day is higher on a corrective bounce after hitting a six-week low Wednesday. The safe-haven gold and silver bulls need a new fundamental spark, such as a geopolitical flare-up, to break prices out of their weeks-long malaise. December gold futures were last down $26.80 at $1,902.80 and December Comex silver was last down $0.586 at $24.655 an ounce.

Global stock markets were mixed overnight, with Asian shares mostly weaker and European shares mostly firmer. U.S. stock indexes are weaker at midday. Risk appetite among traders and investors has waned a bit recently. Covid-19 stimulus package discussions between congressional Democrats and Republicans continue, even after House Speaker Pelosi’s stated deadline for a deal has passed. The window is rapidly closing on any deal reached and implemented before the U.S. election in early November.

Reports say Goldman Sachs is forecasting a commodity market bull run stoked by inflation and new demand driven by additional fiscal and monetary stimulus by the world’s major economies. Goldman also reportedly forecast a return of 28% over the next 12 months on their commodity index, though the firm said individual commodities are likely to perform much better. This news comes as today it was announced Goldman was fined $350 million by Hong Kong securities and futures regulators over “serious lapses and deficiencies.” So, Goldman’s bull market forecast for commodities makes many veteran market watchers wonder if the firm just “talking their book.”

The important outside markets early today see the U.S. dollar index higher on a corrective bounce after hitting a six-week low Wednesday. Nymex crude oil prices are higher and trading around $40.60 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.83% today.

Technically, December gold futures bulls still have the overall near-term technical advantage but trading has turned choppy again and bulls don’t have the power to sustain a price uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the October high of $1,939.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,851.00. First resistance is seen at $1,920 and then at this week’s high of $1,936.00. First support is seen at today’s low of $1,894.20 and then at $1,885.00. Wyckoff's Market Rating: 6.0

December silver futures bulls still have the overall near-term technical advantage and are still working on a price uptrend on the daily chart, but need to show fresh power soon to keep it alive. Silver bulls' next upside price objective is closing prices above solid technical resistance at $27.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.81. First resistance is seen at this week’s high of $25.425 and then at the October high of $25.71. Next support is seen at this week’s low of $24.215 and then at $24.00. Wyckoff's Market Rating: 6.0.

December N.Y. copper closed down 515 points at 314.55 cents today. Prices closed nearer the session low today on profit taking after hitting a more-than-two-year high Wednesday. The copper bulls have the solid overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 330.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at today’s high of 319.60 cents and then at this week’s high of 321.80 cents. First support is seen at 312.10 cents and then at 310.00 cents. Wyckoff's Market Rating: 8.0.

By Jim Wyckoff

For Kitco News

 jwyckoff@kitco.com

www.kitco.com